Everyone Is Furiously Parsing The Statement That John Boehner Made Yesterday On 'Revenue'

Until it's resolved, the Fiscal Cliff is going to be the top topic of conversation.

Today: Everyone will be trying to parse what John Boehner meant yesterday, when he said Republicans were willing to accept 'more revenue' (but not higher tax rates) as part of a fiscal cliff deal.

The comments are being seen as "conciliatory", but it's not exactly clear what they mean, or how that would work in practice.

Goldman's Alec Phillips writes:

House Speaker Boehner (R) reiterated his objection to letting the top two tax rates expire as part of a year-end compromise, as the President has proposed. That said, he endorsed in concept a fiscal agreement that reforms entitlement programs and the tax code. While Boehner explicitly objected to higher tax rates as part of such a package, he appeared to implicitly leave the door open to raising revenue by broadening the tax base. Regarding how House Republicans will approach the year-end discussion, Speaker Boehner indicated that a grand bargain is unlikely to be agreed to in the lame duck session of Congress that starts next week. Instead, his proposed solution is to "avert the cliff in a manner that serves as a down payment on – and a catalyst for – major solutions, enacted in 2013, that begin to solve the [fiscal imbalance]."

...

These statements have mixed implications for reaching a fiscal agreement. On the positive side, the slightly greater flexibility on revenue increases implied by Speaker Boehner's remarks would make it easier for the two parties to reach a broader agreement on longer-term deficit reduction, and might signal a slightly greater openness toward some tax increases as part of a year-end agreement on the fiscal cliff.

This all said, the election dominated the day’s conversation and as we noted in today’s note on how going over the fiscal cliff is now our baseline scenario, investors have much to worry about. Senator Pat Toomey was on CNBC today right before our segment and even he noted that some of his colleagues were openly discussing going off the cliff. No sooner did we write this note than John Boehner “opened the door” to new revenues while Moody’s underscored the importance of this whole debate. We'll expand on this at a later date but it should be noted that the "new revenues" Boehner is talking about is in the context of tax reform, i.e. lowering rates and removing deductions. It must be said that Democrats are far more skeptical of this path's ability to raise additional revenue, the whole debate revolving to some degree around whether "tax cuts pay for themselves."

SocGen's Sebastien Galy wrote yesterday evening:

House majority Rep Boehner proved remarkably constructive in a statement at 3:30 EDT. This was in stark contrast to his tweet the night before. He is willing to accept new taxes in exchange for a series of changes to entitlements, tax code... all of which are likely to have broad support, until we deal with the details.

And in what’s sure to become hotly discussed in conservative circles, Boehner said he’s willing to accept new federal revenues from a “fairer, simpler, cleaner Tax Code.” Such talk of new revenues may cause some on the right to recoil but has long been a part of Boehner’s position.

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Boehner likened the deal he’s seeking to the 1986 agreement between Speaker Tip O’Neill and Ronald Reagan, and he mentioned the two figures by name.

And the White House is eyeing a possible meeting next week between Obama and congressional leaders, although nothing has been scheduled yet.

The tail took the market lower, rebounded and weakened again after comments by Speaker of the House, Boehner, which hinted at compromise and tax revenue increases to avoid the fiscal cliff. The comments were not as friendly as they might have seemed, with a strong focus on reforming the tax code and promoting growth through lower tax rates for some.

Bottom line: Nobody knows what exactly the implications of Boehner's comments are for now, other than that they sounded conciliatory.